Morphogenesis in the differentiating metanephros is regulated by reciprocal interactions between ureteric bud epithelia and the metanephric mesenchyme. The ureteric bud invades the overlying metanephric mesenchyme and induces conversion of the mesenchyme into stromal and epithelial elements, which form the nephron. Concurrently, the mesenchyme stimulates the ureteric bud to grow, branch, and eventually form the collecting duct system of the adult kidney. The Differentiation and Neoplasia Section has focused on the elucidation of mechanisms of inductive signaling in metanephric development, seeking (1) the ligands responsible for nephronic differentiation, (2) other non-inductive regulatory factors of nephrogenesis, and (3) the molecular targets of induction. 1) Previously, we reported the establishment of a cell line from the renal inductor, ureteric bud, and have now purified two soluble secreted inductive factors from medium conditioned by these bud cells. We have determined that they are leukemia inhibitory factor (LIF) and transforming growth factor-b2 (TGFb2), that they can function independently of each other to induce tubular differentiation, and that in combination with FGF2, they accelerate this process to yield tubules with kinetics comparable to those in vivo. We have also found that signaling by these inductive cytokines correlates with activation of the Wnt pathway, which plays a central role in metanephric morphogenesis. 2) We have also analyzed the developmental regulatory effects of two members of the secreted Frizzled-related protein (sFRP) family which are normally expressed in the metanephros. These soluble receptors for Wnts can modulate Wnt protein interaction with and activation of membrane-bound Frizzled receptors. In studies of metanephric development, we reported that sFRP-1 is a potent inhibitor of Wnt signaling and tubulogenesis, while sFRP-2 can partially block the inhibitory activity of sFRP-1. 3) Finally, in our search for molecular targets of induction, we have identified some 72 sequences, of which 36 are novel, by differential display. One of the cDNA sequences that is down-regulated with tubule formation, i.e., CITED1/melanocyte-specific gene 1, seems to play a pivotal role in specification of metanephric mesenchyme. Its expression is localized to mesenchymal blastemal populations of the metanephros and nephroblastoma but not in differentiated epithelia, and it appears to block tubulogenesis through modulation of Wnt signaling. This would suggest that it functions as a gatekeeper for metanephric blastemal cell differentiation. These findings provide insight into the dynamics and complex interactions that modulate stem cell commitment in the kidney, and perturbations of these dynamics, at least in part, may explain the accumulation of blastemal populations in neoplasms such as the nephroblastoma, which often manifests a grossly expanded blastemal component.